Deconstructing the New Paradigm of Stablecoin Payments: Reshaping Global Capital Flow

Stablecoins, as representative tools in the field of digital currency, demonstrate the potential of blockchain to provide a new and efficient infrastructure for traditional financial payment systems. In the past year, the total market value of stablecoins has increased by over 50%, currently surpassing $250 billion, efficiently facilitating the circulation of trillions of dollars in global payment funds.

Industry insiders know that the value of stablecoins lies in embodying the core capability of blockchain "instant transfer of funds and value," making it possible to build a closed-loop payment system on the chain. However, real enterprise-level payment scenarios are much more complex than simple peer-to-peer transfers.

Currently, stablecoin applications aimed at enterprises often adopt a "stablecoin sandwich" architecture, which uses blockchain to replace the horizontal value/fund transfer of traditional payment channels, while still relying on the traditional financial payment system at both ends. Although this design brings improvements, it also limits the full utilization of blockchain advantages.

This article will explore how stablecoins are applied in global cross-border payments from the perspective of global capital transfer:

1. Analyze the existing global cross-border payment system;
2. Analyze the specific improvements of the stablecoin sandwich architecture in fund management, B2B payments, and card network settlements;
3. Discuss how to overcome the challenges at both ends of the stablecoin sandwich, allowing the value of blockchain to run through the entire process.

1. Background of Stablecoin Payments

Among the many applications of stablecoins, B2B enterprise payments are the most notable. The latest report shows that last year, the monthly payment amount for B2B enterprises grew from $770 million to $3 billion. Stablecoins accounted for nearly half of the transaction volume on a certain payment platform, with 49% of customers actively using stablecoins for payments.

The internal data of leading enterprises better reflects the size of the segmented market. According to reports, a large payment company processes about 15 billion USD annually, with approximately half coming from B2B enterprise payments. Another company's annual transaction volume is 10 billion USD, estimated to account for 20% of the global B2B stablecoin cross-border payment market.

The use of global payments is increasingly popular, as the advantages of blockchain-based stablecoins are magnified when financial payment infrastructures become more outdated. Traditional payment networks facilitate over $100 trillion in global payments annually, yet businesses and banks still face significant complexity and delays.

II. Various Models of Global Cross-Border Payments

2.1 Model Based on Traditional Banking Infrastructure

Currently, global payments mainly rely on the operation of traditional banking networks. Transactions between banks in different countries are divided into two parts: "message transmission clearing" and "fund settlement": a certain messaging system is responsible for transmitting transfer instructions between banks, while the actual flow of funds only occurs between those banks that have pre-established correspondent accounts and can directly conduct debit/credit transfers.

Only when both banks are connected to the system and are partners can the final transfer of funds settlement be completed. If both parties have not established a direct cooperative relationship, it is necessary to link with an agent bank that has the corresponding interfaces and positions to complete the funds settlement.

As more intermediary banks are needed, issues such as settlement times lasting several days, rising costs, and difficulties in tracking have emerged. This has also led to great inconvenience in cross-border payments between neighboring countries with underdeveloped financial infrastructures, requiring detours through banks in developed countries.

2.2 PSP-based cross-border funding pool model

The service model of the cross-border fund transfer provider (XBMT) has emerged, aiming to enable businesses to complete global payments without directly using traditional channels. This capability is referred to as "global multi-currency account" or "local collection account."

Its essence is a cross-border fund pool model, with the core service being to provide enterprises with a multi-currency fund pool, enabling them to make flexible payments between different countries.

XBMT is responsible for managing compliance and banking relationships, providing enterprises with a single multi-currency banking product, forming a "closed loop". Liquidity is internally managed across accounts.

XBMT now occupies an important position in the global B2B enterprise payment and corporate fund management market. They operate in a closed-loop model, preparing and scheduling the required liquidity in advance, and then distributing it to corporate clients as needed. By controlling the end-to-end process, XBMT has set strict limits and risk control rules for clients.

Despite its glamorous appearance, XBMT is still built on traditional rails, relying on sophisticated liquidity management techniques to "create" an instant settlement experience. However, the speed and scale of such designs are always constrained by the available liquidity of XBMT in specific countries, as well as the settlement timeliness of its underlying settlement rails.

Some cross-border payment companies have established relatively complete "global multi-currency accounts" or "local receiving accounts" in developed countries, and can achieve relatively "zero-cost" fund disbursement. Compared to the "stablecoin sandwich" model, which incurs costs for both inflow and outflow, this offers a greater cost advantage.

Therefore, the adoption of stablecoin payments requires clear scene advantages, and cannot be generalized.

2.3 stablecoin model

If XBMT is a "structured product" meticulously designed for B2B enterprise payment scenarios, then stablecoins represent a more fundamental leap: they leverage blockchain technology to reconstruct the operational model of internet commerce.

The settlement cycle of stablecoins is equivalent to the block time of their issuing blockchain—this is a magnitude faster compared to traditional transfers. Any system that relies on traditional methods can be replaced by a shared, verifiable ledger that can track the issuance and ownership of stablecoins.

More importantly, stablecoins are usually deployed on top of smart contract platforms, enabling innovative systems and workflows that traditional banking rails cannot achieve. For example, if XBMT wants to overlay a certain logic, it would need to do API integrations with banks in various countries one by one; whereas on open, verifiable protocols, anyone can add functionality to stablecoins without permission.

From a macro perspective, faster and more interactive financial payments can directly amplify the global GDP: companies can receive payments more quickly, allowing funds to enter downstream processes faster, thus reducing management costs and capital occupation caused by settlement delays. When the settlement cycle is compressed from "days" to "seconds" or "minutes", its ripple effect will sweep through the entire economy. At the same time, the existence of verifiable standards allows financial innovation to occur globally without permission for the first time — a qualitative change that traditional financial systems cannot reach.

3. The Application of Stablecoins in Global Payments

3.1 Corporate Fund Management

For example, in corporate fund management: a company has an obligation to make a payment in currency b in country B on a certain date. They must prepare for a fund transfer from country A in currency a before the payment is due. This is a prepaid fund process, and the corporate finance team must consider the preparation time required for timely execution of the payment.

The team must open accounts at local banks to execute payments on time. Sometimes, to support this, the company may seek short-term loans from partners in the region. The longer the global funding settlement is delayed, the greater the exposure to foreign exchange risk, and the higher the capital requirements for the corporate finance department. For companies that only want to execute global payments, managing derivatives to hedge currency risk and calculating short-term liquidity will significantly increase operational expenses.

Stablecoins simplify this system by eliminating the requirement for control over international settlement delays. We can see the role of the "stablecoin sandwich" structure: while the initial deposits and withdrawals at both ends still need to touch the fiat system, the presence of stablecoins allows for smooth completion of the funds flow between the two fiat "ramps."

By using stablecoins, the entire processing is divided into local transfers conducted within countries A and B, while the blockchain facilitates global liquidity settlement between both parties in the middle. (Note: To ensure the success of this exchange, there must be sufficient liquidity on-chain to convert A stablecoin into B stablecoin. )

3.2 B2B enterprise payment

The process of global B2B enterprise payments is similar to corporate fund management, but the B2B scenario can yield greater benefits because B2B payments are often more complex, and their success or failure may affect other aspects of corporate operations.

In this type of payment, banks from different countries are usually directly linked to the delivery of a service or goods. This means that all parties are more sensitive to the tracking of payment progress. For example, the cost of pre-financing may depend on the real-time status of a payment coming in.

In addition, if the payment channels required by enterprises are relatively niche, they often need to go through multiple international transfer routes to complete the fund allocation—such routes may lack a clear progress reporting mechanism, and due to the non-24/7 operating hours of banks, payment times can easily be extended.

When these B2B cross-border payment processes are executed with stablecoins in the middle of the chain, a series of additional benefits will emerge at the enterprise level:

• Both parties can clearly and in real-time manage and monitor the payment status.
• Financing can be directly linked to time-sensitive raw materials or delivery nodes, allowing businesses that heavily rely on the timely arrival of goods to avoid significant risks or delays.
• After the risk is reduced, the cost of capital decreases, and the capital turnover speed increases; with the maturity of stablecoin integration solutions, this effect will bring considerable productivity improvements globally.
• Similar to the corporate fund management scenario, the agency bank link, pre-financing needs, and most foreign exchange exposure have basically been removed. The entire process has been compressed from 3 days in the past to just a few seconds, without the need to consider market closing hours, significantly reducing and simplifying the operational capital requirements.

3.3 Card Organization Network Settlement

In the card organization network, the issuing institution sends payments on behalf of the cardholder to the merchant's acquiring bank, which receives the payment and credits it to the merchant's account. These banks do not directly settle debts; they are all connected to a payment network that conducts net settlement between banks during business hours on weekdays. Each bank must maintain a prepaid balance to facilitate timely wire transfers.

A large payment company began trialing the use of stablecoin for settlement between acquiring banks and issuing banks as early as 2021. This method of using stablecoin replaced the wire transfer process, opting instead to use USDC on Ethereum and Solana. After completing card authorization on a specific date, the company uses USDC to debit or credit the accounts of both parties' banks.

As the system operates on an internal network, its net effect benefits the partners within the network. This is most similar to the closed-loop system of XBMT, but the vast scale of the card organization network benefits the issuers/acquirers (as they previously had to manage global payments).

The advantages of stablecoins are similar to those of fund management, but these advantages belong to the banks within the network: they can reduce the capital requirements needed for timely international transfers, thus avoiding foreign exchange risks. In addition, the openness, verifiability, and programmability of blockchain provide credit between banks within the network.